Mozambique: EDM planning 10 percent rise in tariffs

Maputo — Mozambique's publicly owned electricity company, EDM, is planning to increase its tariffs by 10 per cent next year, according to the director of its Strategic and Performance Office, Antonio Nhassengo.

Launching the company's strategic business plan covering the period up to 2024 at a meeting n Maputo on Friday, Nhassengo said the price rise was inevitable in order to "balance the books".

However, EDM is not free to charge its clients whatever price it likes: the government must agree to any increases in basic services such as electricity. With the economy reeling from the effects of the Covid-19 pandemic, it is by no means guaranteed that the government will rubber-stamp a proposal for such a large price rise.

But without increased tariffs, EDM says it will remain in the red and cannot pay for the investment required.

Nhassengo said that EDM's target is to increase its number of clients to 3.6 million by 2024. Since there are about 2.3 million clients today, that would be an increase of 56 per cent.

The company hopes to connect an extra 300,000 clients a year. This figure is overwhelmingly domestic consumers, not businesses (which only account for some seven per cent of new connections).

The business plan will cost 1.6 billion US dollars. There must be new investment in power generation, in expanding the national electricity grid, and replacing obsolescent equipment

"We're not just going to connect the clients", said Nhassengo, "but we have to guarantee that we supply them with good quality electricity".

A range of projects have been identified to generate the extra power needed to supply an additional 300,000 clients a year. The most important of these is the new gas-fired power station at Temane, in the southern province of Inhambane, with a 400 megawatt capacity, which should become operational in 2023.

Nhassengo believed that, with the Temane power station, "there will be a gradual increase in production, and there will be a surplus of power than can be exported".

Temane would also displace the Cahora Bassa dam on the Zambezi as the primary source of power for EDM. Currently, Cahora Bassa sells EDM 52 per cent of the power it uses, but by 2024 this figure should decline to 32 per cent.

This article originally appeared on AIM

Photo: Club of Mozambique